Transaction-based reference rate introduced in money market
The central bank has decided to base money market interest rates on actual transaction data instead of basing solely on banks’ submitted data – such as the Dhaka Interbank Offered Rate (DIBOR).
The new reference rates will be published regularly on Bangladesh Bank’s website starting Thursday, according to an announcement made on Monday at a press conference held at the central bank’s headquarters, organised by its Debt Management Department.
Bangladesh Bank has undertaken this major reform to ensure transparency and dynamism in the country’s financial market.
DIBOR, introduced in 2010, was based on banks’ offered rates for interbank lending. However, many banks did not consistently provide data, limiting its accuracy.
To address this, BB has developed an automated system to capture real transaction data and introduced two new benchmark rates: Bangladesh Overnight Financing Rate (BOFR): a secured, risk-free rate derived from interbank repo transactions.
Dhaka Overnight Money Market Rate (DOMMR): reflecting unsecured call money transactions.
Rates will be calculated using a volume-weighted mean method, ensuring larger transactions have proportionate impact.
BOFR will be available for overnight and one-week tenors, while DOMMR will cover overnight, one-week, one-month, and three-month tenors.
Statistical techniques such as outlier management will prevent abnormal transactions from distorting rates.
If insufficient transactions occur on a given day, a rolling window method will incorporate data from previous working days.
Bangladesh Bank expects the framework to establish a reliable benchmark for interest rates, facilitating pricing of loans, bonds, and floating-rate instruments, while enabling new investment products.
Officials further noted that the rates have been prepared on a trial basis since March.
From 15 April 2026, investors and the public will be able to view these reference rates daily on the Bangladesh Bank website.
The central bank has also pledged continuous monitoring and annual reviews to further modernise the system.
